HDD Pricewatch: You know where it’s going — we tell you how much it’s going to hurt

This site may earn affiliate commissions from the links on this page. Terms of use.

Hard drive price are rocketing upwards due to the devastating floods in Thailand. After covering the issue last week, we decided to revisit the topic with more information on how prices have changed, along with projections on where they’re likely headed. As bad as things are, there’s good reason to think they’re going to get a whole lot worse.* Anyone who thinks they’ll need a hard drive in the next six months is best off buying it now.

The floods have affected different manufacturers to varying degrees. Thus far, Western Digital has been the hardest hit. Analysts from Noble Financial Equity Research have predicted that the company’s production will fall by nearly 60%, from 58 million units in Q3 down to 25 million in Q4. Samsung and Seagate are expected to see the smallest percentile declines, with Seagate expected to be the principle beneficiary of the supply shortage and subsequently higher pricing.

According to Toshiba, the water around its facilities is more than two meters (6.6 feet) deep, with more than one meter of water inside buildings. Western Digital has stated: “… we estimate that our regular capacity and possibly our suppliers’ capacity will be significantly constrained for several quarters.”

Worldwide total Q4 hard drive production is expected to be about 120 million units, down from 176 million in Q3.

Current Prices (11/06/2011)

We used the price-tracking site Camelegg to check the current and previous price on a series of hard drives. Camelegg’s graphs are simple and easy to read, but the site doesn’t give you the option of graphing the movements of multiple products at the same time.

We’ve supplemented Camelegg’s tracking with our own chart. We’ve included three standard 1TB drives from WD, Samsung, and Seagate, along with a high-end 2TB drive (the Caviar Black) and the enthusiast-oriented, high-end VelociRaptor 600GB. For mobile hard drives we chose two boxed models from Seagate and one bare drive from Samsung.

Note that the SpinPoint F3 was $79 on November 1. This graph was updated after publishing to fix the percentages.

The “% Increase” column is calculated using the hard drive’s base price in September/October 2011. Every drive we checked displayed a price-line similar to the one shown above for the 2TB Caviar Black. The VelociRaptor 600GB was apparently on sale twice in the past two months but only for very short periods of time. In this case, we used the drive’s normal cost. Thus far, the desktop price increases have hit cheap 1TB drives the hardest. The VelociRaptor, in contrast, is “only” 43% again as expensive as it was two months ago.

The mobile hit isn’t quite as bad, but it’s plenty ugly. 320GB of space is now an even $100, even for an OEM (bare) drive.

Assume the position:

Here’s the really bad news. No one has actually run out of drives yet. Most manufacturers have stated they have drives enough to last them through the end of November, meaning that the current price hikes are the result of shipment reductions, supply-side manipulation to reduce demand, and undoubtedly some degree of speculation by the middle men. This last factor has an impact on the total price, but it’s not what’s causing the problem. The storm, so to speak, hasn’t even hit yet. Once it does, a few more things are going to happen.

First off, the so-called “gray” market for hard drives is going to explode. A gray market, as defined by Wikipedia, is “the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer.” DigiTimes reports that gray market HDD sales are already booming as panicked OEMs have tried to lay in additional inventory to see them through the coming months.

One of the downsides to buying in a gray market is that there’s precious little in the way of quality control even at the best of times. Now, the skyrocketing price of hard drives will give resellers with questionable/fraudulently misrepresented goods an enormous incentive to sell them. Reputable OEMs will do their best to prevent this, but it’s ultimately cheaper for them to accept a higher-than-normal HDD failure rate within the first 12 months than it would be to not ship systems due to a lack of hard drives.

The hard drive shortage will undoubtedly boost SSD demand, but the two products aren’t generally all that interchangeable due to significant differences in cost/GB. Even if that changes, SSD manufacturers can’t simply throw a switch and build enough NAND flash to alleviate the projected 12 percent shortfall expected in Q4. Given the historical volatility of the flash memory market, suppliers will be leery of committing to major production ramps, for fear of a demand crash once HDD manufacturers are back online.

We spot-checked a number of SSD prices at Newegg, but saw no evidence that increased demand for flash is pushing prices higher. That may change as HDD prices continue to climb — we’ll begin including SSD data here if they start moving upwards.

* Although we’re focused on reporting the flood’s impact on the IT industry, we’re by no means blind to the human factor. Human lives are more important than hard drive prices, and we hope the companies involved will use the disaster as a reason to invest in long-term protection that improve the quality of life for their workers and reduce the potential damage of any future floods. [Back to top]

SSD’s are the future. This will just make that transition move a little faster. There will always be a need for HDD storage, but it’s days as system storage are almost over.

Joel Hruska

Joe,

I don’t think so. I think I’m done buying hard drives for 6-9 months, and certainly I think the HDD manufacturers are in for an extremely rough time of it–but there are huge scaling issues for Flash. HDD manufacturers recently began shipping 1TB platters and have discovered a way of using table salt to further increase platter density.

Flash, in contrast, is limited by both process technology (as it shrinks, leakage currents become increasingly problematic) and by the number of bits you can cram into a cell without fundamentally compromising error rates and performance. Over-provisioning is only an effective strategy if the total amount of flash required at 3-4 bits per cell is cheaper than the amount you’d need at 2BPC.

The current hard drive prices are awful; they’re going to get worse. That said, the WD 2TB drive listed above is still more than 10x cheaper (in terms of $$$/GB) than the cheapest 256GB SSD at Newegg. Obviously the SSD has benefits that make it more attractive than the HDD long before we reach the price parity point, but so long as consumers need raw storage, they’ll reach for hard drives.

The big concern from the OEM perspective is being pushed out as *primary* suppliers of storage for consumer and business systems.

With an SSD you’re buying more then capacity. You’re buying a superior experience. Prices for SSD’s are significantly lower then they have been in the past and there will be many who try SSD’s for the first time who never return to HDD’s (as a system drive).

Joel Hruska

Joe,

Sure. But if you’re an OEM trying to deal with this problem, that’s not real comforting. The SSD manufacturers will do well and the experience will likely encourage more people to use them, but that’s small comfort to the OEMs who have to figure out how to deal with the additional cost of switching. Do you pass the cost on to consumers and risk losing sales, or do you try to eke it out of razor thin margins?

If your system retails for $400 and you’ve got a 10% margin on it, having to spend an extra $10-15 on storage hurts.

The $400 machines won’t use SSD’s, but more of the mid-tier will. SSD’s aren’t for everyone yet, but they will begin to be more appealing after OCZ ships the first TLC SSD’s at $.80/GB. You will see 120GB TLC drives as main storage in more laptops (not saying all).

You bring up a valid point, systems will be more expensive, but if I’m paying more, I better be getting a better experience. An HDD isn’t going to give me that benefit. The tech has remained stagnant for almost a decade.

Generally speaking, there will be less storage per machine, but people will utilize external HDD’s and/or “the cloud” for their mass storage.

Joel Hruska

Joe,

The worst-case scenario from the OEM POV is that rising storage prices push system prices upwards–which cuts demand and hurts everyone involved. Remember, SSD prices are also susceptible to supply and demand–if OEM’s start snapping them up, prices will rise there as well.

As for HDD performance remaining stagnant for almost a decade, I suggest you re-examine your assumption. http://hothardware.com/Reviews/Unsung-Heroes-14-Years-of-HDD-Performance/?page=2

(I wrote that for HH and actually have more benchmark data than the article used.)

Nothing is going to change the fact that HDDs were always the slowest system component, or that they remain an order of magnitude slower than SSDs in many cases — but the WD300 VelociRaptor is more than 3x faster than the WD800JB (8MB cache) 80GB drives. The former came out in 2008, the latter in 2002. A 3x performance improvement in six years from spinning media isn’t too shabby.

Gary Davis

I suspect the most likely market segment to turn to SSD is consumer external. (USB). It is a drop in replacement. Unfortunately, many consumers will end up underutilizing SSDs in the process. However, Joel is correct IMO, the transition to flash based storage is not so easily accomplished by the OEMs, in particular the smaller “white box” makers.

Perhaps you should re-read your own material. The first link pretty much backs up Joel’s POV. “In general, a change of x percent in a quantity results in a final amount that is 100 + x percent of the original amount (equivalently, 1 + 0.01x times the original amount).”

Wait a minute. I thought things were going to get cheaper when everyone moved their business to Thailand…REALLY???

Anonymous

OOK wow that might just be the coolest hting I have ever seen.
privacy-online.us.tc

Anonymous

I just returned a Lenovo laptop after waiting for nearly a month for a replacement hard drive. They cited the flood related shortage as a reason for the backorder.

B Norton

This is why businesses should be very careful in planning locations. While the coastal areas provide easy access for shipping they are dangerously susceptible to this type of disaster. Wishing I would of purchased drives for my RAID backups now!

davidjlean

As the world argues over the cost of doing something to reduce our pollution of this planet. (global warming et al). We increase the likelihood that we will see more of & pay much more due to these “natural” disasters. If you include cost of disasters & the flow on costs, reducing our pollution is much cheaper than doing nothing.

As for safe locations, sure Katrina, Japan & Thailand had a coastal aspect. But Brisbane & India was just high rainfall. Auckland (power), Melbourne (gas), Guadalajara(sewer), Boston(water) were just infrastructure failures.
Most areas of the world are vulnerable to some combination of ; water, snow, wind, extreme temps, lack of water, power supply, earthquakes / volcanoes, dust storms, Solar storms (electrical damage). Made worse by poorly maintained infrastructure ie: Nuclear plants & chemical manufacture.The impact is much greater than any terrorist act. Perhaps we need a “War on ignorance””Careful planning” is easier said than done.

davidjlean

Good article. I noticed a 11% price hike in USB external drives, just last week. Nice to know what was driving it.